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Buying a Car in the US

Buying a car, no matter in what country you are in, is always both exciting and tedious/exhausting at the same time. At least for me. Some people are probably waking up one day and decide that they want a new car and on the next day they sign a contract somewhere. I can’t do that. I am a thinker and planner and especially when it comes to monetary-heavy transactions like buying a car, I not only think twice, but probably a third, fourth and fifth time about it. So it all can become very time consuming but with regards to that car I just recently bought in the US, I can say that preparing and doing research certainly paid off in the end.

No Car? No Way!

When I moved to Sunnyvale end of January 2009, I already knew that I had to get my US drivers license and then a car in the foreseeable future. Living out here in the South Bay, without a car is…doable, yes, don’t get me wrong. It just takes ages to go somewhere on public transport. You will get where you want to eventually, but it just takes looooonger. A rough estimate I came up with was that it takes about three times longer to take public transportation over here than doing the same using a car. But that is not supported by any evidence, just a guess on my end.

I had to go through the written and practice test at the DMV, which was not a problem after studying the DMV handbook (PDF version) and keeping the pitfalls in mind. And after that, I had to think about which car to get and making up my mind about it.

I have a soft spot for German cars, I have to admit. I have had two cars before in Austria, both of them were VW Golfs (a 1996 in black, and a 2003 in silver), very popular and reliable. But this time I decided that I would like to go with something more sporty. In the end I decided to go with a coupe by BMW. After thinking about the financial impact, I went for a certified pre-owned car from a dealer instead of a e.g. leasing a new one. Also because the whole leasing process is, in general, pretty confusing (at least to me) and so I feared that they might put in some additional hidden fees into the leasing rate that might in the end increase the financial burden.

Buying a car from a dealership and not from a private party was also a decision I made, simply because the risk of getting a not-well-maintained car with some hidden defects is higher buying from a private party than from a dealer. Besides, buying a certified pre-owned vehicle means it comes with original manufacturer warranty, which is another big plus in my mind. Of course, you pay more for that warranty but to me it seemed worth it.

Research

So once I had figured out the model I was looking for, I did some research to see which dealers had one in their inventory. I ended up with finding three dealers (two of the cars were black, one was silver). I visited all three and test-drove the vehicles. Actually I only test-drove two, because at the third dealership they either were unable to find the car on their lot or it was already sold. Whatever.

After doing that, Internet research came into play, because I wanted to be prepared for the negotiation phase. Edmunds.com was a very helpful resource for that. Apart from various guides, articles about the car market and tips about buying a car, it also lets you calculate what they call TMV (True Market Value) of a used car, based on color, mileage, extras and condition. This is very helpful as you can take this amount as a basis for the negotiation phase.

Negotiating

In the end I ended up with a choice between two similar vehicles, black and silver with more or less the same sticker price set. I started by calling dealer A and naming essentially the TMV provided by Edmunds.com minus about a thousand dollars. I was not really expecting from them to meet that offer, but rather drop their sticker price. So they did, by about 300 Dollars. With that in mind, I hung up, saying I have to think about it and called dealer B, doing essentially the same. They dropped the price as well, by about the same amount. Then I repeated the procedure, getting back to dealer A, naming an amount slightly higher than my first offer to dealer A, saying that the other dealer offered me this and asking if they could match it. They would then drop the price again.

After going back and forth a couple of times, at some point you feel that it probably does not go down any further. In the end, the offers from both dealers where pretty similar and actually a couple of hundred dollars below the actually TMV I had from Edmunds.com. I finally based my decision on how I was treated by the sales person and so I went for the black car and felt that, based on the numbers, I got a pretty good deal. I am pretty sure that, if I had gone for an American car, I could have lowered the price even more, essentially getting a bargain. But, to be honest, when talking about new cars, I have to say “No, thanks.” to American. Sorry.

Conclusion

I picked up the car over the weekend and again, I was treated very nicely by the sales person. I was in contact with many car salespeople during the last couple of weeks, some of them were very aggressive and would like you to sign a contract right away after the test-drive. And I have to say that most of them live up to the stereotype, wearing silver or gold jewelry (necklace, ring, watch), having kind of a slimy attitude and saying things like “You look good in that car.” No way. Really? That sales person I finally ended up doing the deal with did not do any of that and I felt this should be rewarded by giving her the deal.

Below I have put together a couple of links to resources on Edmunds.com and elsewhere that I found helpful doing this “Buying a Car in the US” project:

Confessions of a Car Salesman: This is a multipage-long article about the experiences of a journalist who worked undercover at two different car dealerships. Very worth the read with some quite amusing parts.

Also, for people preparing for the written test at the DMV, I found the following sample tests useful for practicing. Some of them offer up to 20 free questions, some only 5, but it is good to mix and match to be prepared for most questions which eventually might come up: